Intermediate Accounting: Reporting and Analysis (Looseleaf)
2nd Edition
ISBN: 9781285453859
Author: WAHLEN
Publisher: Cengage
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Chapter 19, Problem 2P
To determine
Prepare a pension plan worksheet for 2016 and 2017, and prepare necessary
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TAN Company has a defined benefit pension plan for its employees. The plan has been in existence for several years. During 2018, for the first time, TAN experienced a difference between its expected and actual projected benefit obligation. This resulted in a cumulative “experience” loss of $29,000 at the end of 2018, which it recorded and which did not change during 2019. TAN amortizes any excess loss by the straight-line method over the average remaining service life of its active participating employees. It has developed the following schedule concerning these 40 employees:
Employee Numbers
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Expected Years of Future Service
1–5
3
21–25
15
6–10
6
26–30
18
11–15
9
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12
36–40
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TAN makes its contribution to the pension plan at the end of each year. However, it has not always funded the entire pension expense in a given year. As a result, it had an accrued…
The Donna Company adopted a defined benefit pension plan on January 1, 2016, and prior service credit was
granted to employees. As of January 1, 2016, the prior service cost is $68,250. The unrecognized prior service
cost is amortized by the straight-line method over the remaining 15-year service life of the company's active
employees. Funding for the pension plan was $170,745 and $186,933 at December 31, 2016 and 2017,
respectively.
Annual service cost
Discount (interest) rate
Expected (and actual) return on plan assets
2016
$161,877
8%
10%
2017
$178,065
8%
10%
Required:
Prepare the journal entries to record net periodic pension expense and the funding as of December 31, 2016
and 2017. Show computations and round answers to the nearest dollar.
Farber Company adopted a defined benefit pension plan on January 1, 2019, at which time it awarded retroactive benefits to its employees. This prior service cost amounted to $200,000, which the company did not fund. Farber planned to amortize this prior service cost in the amount of $10,000 per year. Farber determined its pension expense (which included the prior service cost amortization) to be $75,000 for 2019, of which the company funded $74,000. At the end of 2019, the fair value of the pension plan assets was $74,000 and Farber’s projected benefit obligation was $265,000.
Prepare all the journal entries related to Farber’s pension plan for 2019.
Prepare all the journal entries related to Farber’s pension plan for 2019.
Chapter 19 Solutions
Intermediate Accounting: Reporting and Analysis (Looseleaf)
Ch. 19 - Prob. 1GICh. 19 - Prob. 2GICh. 19 - Prob. 3GICh. 19 - Prob. 4GICh. 19 - Prob. 5GICh. 19 - Prob. 6GICh. 19 - Prob. 7GICh. 19 - Prob. 8GICh. 19 - Prob. 9GICh. 19 - Prob. 10GI
Ch. 19 - Prob. 11GICh. 19 - Prob. 12GICh. 19 - Prob. 13GICh. 19 - Prob. 14GICh. 19 - Prob. 15GICh. 19 - Prob. 16GICh. 19 - Prob. 17GICh. 19 - Prob. 18GICh. 19 - Prob. 19GICh. 19 - Prob. 20GICh. 19 - Prob. 21GICh. 19 - Prob. 22GICh. 19 - Prob. 23GICh. 19 - The actuarial present value of all the benefits...Ch. 19 - Prob. 2MCCh. 19 - Prob. 3MCCh. 19 - Prob. 4MCCh. 19 - Prob. 5MCCh. 19 - Prob. 6MCCh. 19 - Which of the following is not a component of...Ch. 19 - Prob. 8MCCh. 19 - Prob. 9MCCh. 19 - Prob. 10MCCh. 19 - Prob. 1RECh. 19 - Prob. 2RECh. 19 - Pinecone Company has plan assets of 500,000 at the...Ch. 19 - Prob. 4RECh. 19 - Prob. 5RECh. 19 - Prob. 6RECh. 19 - Prob. 7RECh. 19 - Prob. 8RECh. 19 - Given the following information for Tyler Companys...Ch. 19 - At the beginning of Year 1, Cactus Company has...Ch. 19 - Prob. 11RECh. 19 - Prob. 1ECh. 19 - Prob. 2ECh. 19 - Prob. 3ECh. 19 - Prob. 4ECh. 19 - Prob. 5ECh. 19 - Prob. 6ECh. 19 - Prob. 7ECh. 19 - Prob. 8ECh. 19 - Prob. 9ECh. 19 - Prob. 10ECh. 19 - Prob. 11ECh. 19 - Prob. 12ECh. 19 - Prob. 13ECh. 19 - Prob. 14ECh. 19 - Prob. 15ECh. 19 - Prob. 16ECh. 19 - Prob. 1PCh. 19 - Prob. 2PCh. 19 - Prob. 3PCh. 19 - Prob. 4PCh. 19 - Prob. 5PCh. 19 - Prob. 6PCh. 19 - Prob. 7PCh. 19 - Prob. 8PCh. 19 - Prob. 9PCh. 19 - Prob. 10PCh. 19 - Prob. 11PCh. 19 - Prob. 12PCh. 19 - Prob. 1CCh. 19 - Prob. 2CCh. 19 - Prob. 3CCh. 19 - Prob. 4CCh. 19 - Prob. 5CCh. 19 - Prob. 6CCh. 19 - Prob. 7CCh. 19 - Prob. 8CCh. 19 - Prob. 10C
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- On January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,140,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016: Employee Expected Years of Future Service A 1 B 3 C 4 D 5 E 5 F 6 Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik’s pension expense, in addition to the amortization of the prior service cost for 2016 and 2017: 2016 2017 Service cost $542,500 $558,073 Interest cost on projected benefit obligation 104,000 146,637 Expected return on plan assets —…arrow_forwardOn January 1, 2019, James Company adopted a defined benefit pension plan. At that time, James awarded retroactive benefits to its employees, resulting in a prior service cost that created a projected benefit obligation of $1,250,000 on that date (which it did not fund). James decided to amortize the prior service cost by the straight-line method over the 20-year average remaining service life of its active participating employees. James' actuary has also provided the following additional information for 2019 and 2020: (1) service cost: 2019, $145,000; 2020, $152,000; (2) expected (and actual) return on plan assets: 2020, $34,000; and (3) projected benefit obligation: 1/1/2020, $1,520,000. The discount rate was 10% in both 2019 and 2020. James contributed $330,000 and $350,000 to the pension fund at the end of 2019 and 2020, respectively. There are no other components of James' pension expense. Required: 1. Compute the amount of James' pension expense for 2019 and 2020. 2. Prepare…arrow_forwardOn January 1, 2016, Baznik Company adopted a defined benefit pension plan. At that time, Baznik awarded retroactive benefits to certain employees. These retroactive benefits resulted in a prior service cost of $1,290,000 on that date (which it did not fund). Baznik has six participating employees who are expected to receive the retroactive benefits. Following is a schedule that identifies the participating employees and their expected years of future service as of January 1, 2016: Employee Expected Years of Future Service A 1 B 4 D E F 6 Baznik decided to amortize the prior service cost to pension expense using the years-of-future-service method. The following are the amounts of the components of Baznik's pension expense, in addition to the amortization of the prior service cost for 2016 and 2017: 2016 2017 Service cost $386,800 $410,683 Interest cost on projected benefit obligation 116,800 174,737 Expected return on plan assets 93,000 Baznik contributed $799,800 and $759,200 to the…arrow_forward
- Jay Company has had a defined benefit pension plan for several years. At the beginning of 2019, Jay amended the plan; this amendment provided for increased benefits to employees based on services rendered in prior periods. The prior service cost related to this amendment totaled $88,000. As a result, the projected benefit obligation increased. Jay decided not to fund the increased obligation at the time of the amendment, but rather to increase its periodic year-end contributions to the pension plan. The following information for 2019 has been provided by Jay’s actuary and funding agency and obtained from a review of its accounting records: Projected benefit obligation (12/31) $808,090 Service cost 183,000 Discount rate 9% Cumulative net loss (1/1) 64,500 Company contribution to pension plan (12/31) 200,000 Projected benefit obligation (1/1)* 513,000 Plan assets, fair value (12/31) 698,000 Accrued pension cost (liability) (1/1) 33,000* Expected (and actual) return…arrow_forwardLewis Industries adopted a defined benefit pension plan on January 1, 2018. By making the provisions of theplan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost wasfunded immediately by a $2 million cash payment to the fund trustee on January 2, 2018. However, the cost isto be amortized (expensed) over 10 years. The service cost—$250,000 for 2018—is fully funded at the end ofeach year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actualrate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retiredduring 2018.Required:Determine each of the following amounts as of December 31, 2018, the fiscal year-end for Lewis:1. Projected benefit obligation2. Plan assets3. Pension expensearrow_forwardLewis Industries adopted a defined benefit pension plan on January 1, 2016. By making the provisions of the plan retroactive to prior years, Lewis incurred a prior service cost of $2 million. The prior service cost was funded immediately by a $2 million cash payment to the fund trustee on January 2, 2016. However, the cost is to be amortized (expensed) over 10 years. The service cost—$250,000 for 2016—is fully funded at the end of each year. Both the actuary’s discount rate and the expected rate of return on plan assets were 9%. The actual rate of return on plan assets was 11%. At December 31, the trustee paid $16,000 to an employee who retired during 2016. Required: Determine each of the following amounts as of December 31, 2016, the fiscal year-end for Lewis: 1. Projected benefit obligation 2. Plan assets 3. Pension expensearrow_forward
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